R R Kabel Limited (RRKABEL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the RRPUB Limited Q1FY27 Consense Call hosted by MUSG. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. I now hand the conference over to Mr. Chirag Bhatia from MUSG. Thank you, and over to you, sir.

Thank you, Pune. Good afternoon, everyone, and I extend a warm welcome to all the participants on the Q1FI 27 earning conference call of RR Khabra Ltd. Today on this call, we have Mr. Rajesh Khabra, Joint Managing Director, Mr. Rajesh Jain, Chief Operating Officer, and Mr. Jigar Mehta, Chief Financial Officer. Before we begin this call, I would like to give you a short disclaimer. This call may contain some forward-looking statements, which are completely based upon our beliefs, opinions, and expectations as of today. These statements are not the guarantee of the future performance and involve unforeseen risk and uncertainty. With this, I hand over the call to Mr. Rajesh Shabraji. Over to you, sir.

Good afternoon, everyone. And thank you for joining us for RR Cavill's Q1 FY27 earnings call. I have with me Mr. Rajesh Den, our Chief Operating Officer, and Mr. Jigar Mehta, our Chief Financial Officer. Let's begin with the broader business environment. The quarter continues to see volatility in metal prices and foreign exchange, along with uncertainty across global markets. At the same time, the demand remains supported. We continue to see healthy activity across infrastructure, construction, industrial projects, and power-related applications. Against this backdrop, I am pleased to share that we have started FY27 on a strong note. During the quarter, we delivered our highest ever quarterly revenue, EBITDA, and profit after tax. Our wired and cable business continued to be the main driver of growth. The growth was not limited to one market. We saw growth in the domestic business as well as exports even though we have a high exposure to the Middle East market. The disruption in the Middle East was partially offset by other export markets. Further, we also saw shipment normalization and recovery for Middle East market in May and June. However, supply chain related issues still remain. But we are confident of overcoming those challenges. Overall, wires and cable volumes grew by 17% year-on-year, with similar growth seen both in domestic and export markets. Cables grew significantly faster with more than 25% volume growth, while volume growth in wires was approximately 12%. We continue to work on strengthening product availability, expanding our distribution reach, and deepening our engagement with dealers and distributors. On the B2B side, our focus remains on building capabilities in projects, industrial, and power cables. We believe this will become an increasingly important part of our growth over the next few years. What is also encouraging is our progress in our SMEG business. The segment recorded a healthy revenue growth and reached a break-even position during the quarter compared with losses in the earlier periods. We have been working towards this for some time, so this is an encouraging development for us. SMEG revenue grew by approximately 28% year-on-year. The quarter saw good growth in lights, appliances, and switches. While the fine business benefits from the improved realization and better premium product mix, we will continue to focus on premiumization, selected product launches, distribution expansion, and tighter cost control. The quarter's performance reflects the strength of our team, distribution network, manufacturing capabilities, and long-standing customer relationships. It also shows the operating discipline that we have been building across the organization. Our progress remains aligned with Project Rise announced last year. The first quarter has given us a good start. We will, however, continue to look at the business on a full-year and long-term basis. Our long-term priorities continue to be the same. We want to grow ahead of the industry in wires and cables, improve our position in the cable and B2B businesses, and build OPMG into consistently profitable business. We will remain focused on execution, customer engagement, and building the business for sustainable long-term growth. I will now hand over the call to Mr. Rajesh Jain to take you through the financial and operational performance in more detail. Thank you.

Thank you, Rajajji, and good afternoon, everyone. Let me start with the overall performance for the quarter. The revenue from operations stood at Rs 3,168 crore, representing growth of around 54% over Q1 of last year. Operating EBITDA stood at Rs. 285 crore, almost double the Rs. 143 crore recorded in the corresponding quarter last year. The operating EBITDA margin improved to 9% compared to 7% in Q1 F526. Profit after tax stood at Rs. 205 crore compared with Rs. 90 crore last year. The quarter also included an exceptional item of approximately 14 crore rupees relating to reversal of the provision for the history of the impact of the new labor courts. Coming to the segment performance, wire and cable revenue stood at Rs. 2880 crore, growing at approximately 57% year-on-year on the back of impressive volume growth. Strong execution and favorable industry dynamics. Segment profit increased to approximately 285 crores from UPS 139 crores in Q1 at 526. The segment profit margin improved to 9.9% compared with 7.6% in the corresponding quarter last year. Profitability improved due to improved product mix, disciplined commodity management, and operating efficiency. In the SMEG business, revenue stood approximately Rs.288 arose, growing by 28% year-on-year, supported by continued demand for premium and new products across C categories, along with ongoing distribution expansion. The segment reached an operational vacuum position, compared with a loss of approximately 7 crores in Q1 at 523, and a loss of approximately 9 crores in Q4 at 523, making a significant milestone in the SMHG business transformation, given by premium products and operating leverage. Lights, appliances, and switches recorded healthy growth. In 10, volumes were broadly fresh year-on-year, but revenue increased due to higher realization and a better product mix. Turning to working capital, net working capital days remained broadly stable at 60 days. Our capacity expansion program is also progressing as planned, with new capacities expected to be added during the current quarter in Sylvassa. Looking ahead, we remain positive about the long-term demand outlook. Infrastructure development, housing industrial investment, electrification, and the shift towards organized and compliant products continue to support the industry. At the same time, we will remain watchful of metal prices, foreign action moments, inventory levels, and investing category requirements. Our focus will be on maintaining healthy volume growth, protecting margins through timely pricing, Improving the product mix and sustaining the progress made in Ash-Images. With this, I now request to open the floor for the triton and unperfession.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the platform telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, you will wait for a moment while the question queue assembles. The first question is from the line of truth, Jane from Ambit Capital. Please go ahead.

Thank you so much, James, for the opportunity, and congratulations on very good numbers. Now, my first question is about tables. So, in the last three or four quarters, we've seen that, you know, tables growth has improved substantially. So, just wanted to understand, you know, A, where is this market share case that you're seeing coming from? Is it more distribution or is it more P2B? And we also, where are we in terms of the utilization levels here, incrementally, you know, and how should we look at margins improving from it in the table line. That's my question.

Thanks, sir. So, when we talk about growth in our cable segment, as we explained in our earlier strategy also that our software will be growing in B2B segment, more focusing on cable side of the business, and now when we are at execution phase, we see good growth coming from cable side, and majority of this is we are serving for our distribution terminology. And, of course, the margins, as you can see, it's like due to scale and improving product mix, and

we are sure to maintain this kind of growth in coming quarters.

So, and just on that, right, this is the last quarter you might mention that the 3D cooler, FI 28, the margin guidance for biogin cable segment was about 10.5%. Now that you are, you know, close to 10% in this quarter, do you think that you have to upgrade your guidance, or you still maintain that?

So, we'll remain there, because while we are in order to touch, we have already increased margins for the year. But since it is early in the year, we continue to maintain our overall margin guidance

of 10.5% by FI28. Got it, sir. Thank you so much and all the best.

Thank you. The next question is from the line of Aachal Lohadi from Nuwama Institutional Equities. Please go ahead.

Yeah. Good evening, team. Thank you for the opportunity. Congratulations for great execution. Just two or three questions, if I may ask. First, on the... Industry growth, you know, what is your sense? I know it's very hard to call out for a quarter, but still, in terms of the growth for wired and cables, both, if you could call out, what would have been the industry growth for the quarter in your best assessment?

It may be tough to call out at industry level, but I think it may be around 10, between 10 to 12 percent at most.

Okay, understood. The second is in terms of the export, like Rajesh called out that, you know, exports grew at almost similar pace compared to domestic, despite the Middle East challenges. So, if you could talk a little bit more about this export aspect in terms of the market, how are you seeing growth, what kind of mix are we seeing there? Are we seeing improvement in the, you know, cable pickups as well?

Of course, as you are aware, we are a geographically diversified company, and though there were, like, distribution from Middle East, but still, like, the overall performance is, like... Based on other countries and other geographies were able to have higher growth or tech power growth with our domestic market also. And particularly since now we are focusing on changing product mix in export markets, more focusing on table size where we see good demand also. So this is helping us to achieve higher growth in export markets also.

In spite of so many Any particular market you want to call out, sir, which has done very well and which is expected to do better? And secondly, in terms of approvals for the cable fee, you know, where are we in that journey? Are we, like, more than midway through or it's still the beginning for us?

Still, I will say it's like just opening up our larger journey and we are in way to execution of overall global presence also and in many new area geography and new products also we are in the process to getting approvals and from new geography also we are getting some good gains in export markets.

Got it. Thank you. I have more questions, but I'll call back in the queue, sir. Thank you so much.

Thank you. The next question is from the line of PTT Priveti from Asian Market Securities. Please go ahead.

Hi sir, thank you for the opportunity and congratulations on pretty strong set of numbers. Sir, last quarter you have mentioned data center as a medium term growth driver. Just wanted to check, have you started receiving repeat orders from this segment or is it fair? Will it be fair to say that the opposite is still hardly at the bidding stage?

The data center, still it is more on like announcement phase rather than attribution, and of course we have started getting a few orders, and it is like continuous process where we keep adding new customers in data center, and there we are supplying like conventional cables, which is like a regular part of our product identity.

So what's the share of the overall data center cables in the top line?

Oh, it will be very nice. To be very frank, the wire and cable industry as well, very big, and data center is one of the areas where it applies.

Got it, sir. Sir, additionally on the exports front, with the rising investment in Power Infra and data center in the U.S., how do you view the opportunity there, and what approvals or investments are required to meaningfully scale your exports business?

Of course, the U.S. is a very big opportunity for Indian markets and for us also, and already we have a few approvals. We are in process of onboarding to customers also, but as you know, still things are not clear on tariff fronts, and still people are not aware how these things will process, but definitely this will be one of the very big opportunities for us in future.

If I may squeeze just one more question pertaining to the FMEG segment. Sir, which FMEG categories are witnessing the strongest traction, and if you could just call out the premium mix in all the categories?

So, like, we have seen very good growth in light, uptimes, and futures. It's already informed that in France, we had, like, But at the same time, we were into our realization and better premium product mix. Almost 25% of our revenues are coming from premium products.

That's helpful. Thanks a lot.

All the best.

Thank you. The next question is from the line of Umang Mehta from Kotak Securities. Please go ahead.

Hi, ah thanks for the opportunity and congrats on a good quarter. My first question was on margin, so if we look at the YUI expansion, I understand the base was slightly low, but is it possible to ah split the expansion into the ah buckets of mix leverage and advantageous gains? I just wanted to kind of understand how much is mix contributing to ah margin expansion.

So, what do we see? The biggest benefit or biggest contributor is scale. Because of scale benefits, we were able to improve our margins, apart from better cost absorption, and we are also taking many other initiatives to improve our margins. So, this is a result of a combination of all these efforts and product makes and scale benefits.

Sure sir. Second question is on pricing growth. So, the 40 percent odd pricing growth which is seen in one queue. If spot price is sustained, should we accept pricing growth to improve further in second quarter or should it be more or less stable at current levels?

If I compare with Q2 prices of last quarter, and if we consider current prices to be stable in current quarter, then it may affect around about 30% in terms of pricing or the rate fluctuation or rate hike in LME prices of raw materials.

And just one last one was on channel stock. So, there was some correction in commodity prices towards quarter end. So, did you see any kind of stocking, de-stocking impact or would you say that your channel inventory is more or less normal as of quarter end?

So, when we see on a very short span of time, you may say there are some recession of shopping or de-shopping, but normally what we believe, this is an area which is like the iron cable is consumed throughout the year or in every sector. So, there may be like some impact in like Q kind of this last part also, but I hope in longer term, we have to see it as usual in not longer term, time term.

Got it. Yes, sir, sir, you mean positive impact or negative impact on volume?

So, if I consider only the last part of Q2, then there was negative impact in volume.

I understand. I understand. Very helpful. Thank you so much, sir. And all the best.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question, may press now and one on the touchstone telephone. The next question is from the line of Natasha Jane from Philly Capital. Please go ahead.

Thank you for the opportunity, sir, and congratulations on your great execution. My first question is, could you give us some color in terms of your domestic expansion? We understand rest is your strongest market, but how has expansion to, say, the eastern, northern parts been for you? And any particular color, which domains in India is doing better for you at this moment?

Yeah, so if by large I see we are making good progress even in the south part of the country also, apart from already west and north where we are doing fairly good. East, of course, still we have not done that much kind of growth, but in south we are

doing better than previous times.

And, sir, what about North India for you? Could you also give us some color in quantification in terms of the contributions, obviously, right?

I do not have exact backup, but North and West contribute almost 65%

in our domestic revenue.

Understood. And, sir, second question is in terms of working capital. Is there any sign of stress in the trade in terms of payment?

No, we have not seen any stress in working capital, and as you have seen in our reservoirs, we have done fairly well an hour, days of renew, reduced by three days in this quarter.

Great. All right. Thank you so much, sir, and all the very best.

Thank you.

The next question is from the line of Nikhil Purohit from FIT Enter Jet Management. Please go ahead.

Hi, thanks. Thanks for the opportunity and congrats on our very, very strong set.

I have two questions. I joined the call a bit late, so I'm sorry if these questions have been answered. Sir, firstly, we had mentioned that exports would be impacted in quarter one. In the last quarter, we mentioned that. So can you throw some more slides here, the kind of growth that we saw, how were the margins here, and also what did the geographic mix look like?

So, though in earlier days of Q1, we were expecting there may be some disturbance, but thankfully, we were able to achieve similar growth in this quarter, what we achieved in domestic health coverage, overall life, almost 50% growth over a series of years, we were able to achieve two other geographies in this quarter. So, though there was like material disturbance in the initial part of this quarter, but earlier it was offset by other export markets, and now we have also seen shipment normalization and recovery from the middle of this market.

So, that is visible in this quarter as well, right? In the normalization?

Yes.

Okay, okay. And so, secondly, generally, H2 is stronger than H1 in the rising cable industry. Do we expect that time to continue for this year also, after seeing such strong number in quarter one?

Normally, historically, we have always seen H2 is always better than H1. So, we expect the same thing in this year also.

Got it. Thank you.

Thank you. The next question is from the line of Sunday, Shetty from HSBC. Please go ahead.

Am I audible?

Yes.

Hello. Good afternoon, team. Thank you, and congratulations on a very great set of numbers. First of all, my first question is on project execution, especially in Power T&D. We have seen some disturbances in execution due to Middle East. Are you seeing improvement there now that things have subsided a bit?

Are you seeing demand inquiry better there in that segment? Sure, maybe as I said in the last session, so that now we are... Now it is becoming normal, and we are back to normal situation kind of thing, and we have seen recovery from middle east to middle east,

so I think now we are at normal levels in this quarter.

And sir, there has been a significant rise in other income.

Is there a one-off in that, or is it like a normal run rate now? I will not say it is normal run rate, but since we have seen there was like positive, or rather, dollar was infected in this quarter, and since we are export-heavy companies, so we have seen good impact, but it is part of our business community, I guess.

Okay.

Thank you, sir. Thank you.

Thank you. The next question is from the line of Raul Agarwal from Ikaraya Set. Please go ahead.

Yeah, hi, team. Good evening. Thank you for the opportunity. Sir, two questions. Firstly, on the CapEx side, you said, you know, Sylvassa starts in the current quarter. I just wanted to understand, if you just elaborate a bit on, you know, what capacities are going to come on stream over the next 12 months, and what are the products we are talking about?

Yes, so in this quarter, we are expecting new capacities to be added in Sylvassa, which will be on wire side of our business. But at the same time, this year, we will add a few capacities at Vavode also, which will be highly focused on table side of the business. So overall, our capacity is planned in such a way that we will be able to meet our projected growth or volumetric targets for what we have set at the beginning of the year. So, this will be like well-balanced among capacity

addition and expected growth in my revenue profile.

Good morning, sir. Sir, could you highlight some new product development in terms of pipeline which will roll out over the next 12 months from the new capacity?

Broadly, it will be like in power table side where we are keep adding few capacities, but at the same time, we will focus on new product or rather new industries also where we can have more. The share of the business, like in maybe niche hashtags kind of table, or is it in power table, or so till now we are like in a new table more than HV table, but still our presence is low, so we will keep increasing our

presence in HV table side of the market.

Got it, sir. And last question was on SMEG. Just share your thoughts on, you know, how do you think about in-house manufacturing? What are the products right now we are making in-house? And incrementally thoughts on how do you look at manufacturing for SMEG overall?

So, if you see our brand's backup, almost one-third year doing in-off and two-thirds is out, we are doing outsourcing, in which, like, selling fan and category, we are having in-off production. And by large, we'll maintain this kind of situation only because our focus will be more to increase market presence through better R&D and brand presence, and maybe manufacturing scenario

remains as This is what we have currently.

So, the lighting and appliances are all outsourced.

Is that correct? Some part of lighting, like commercial lighting, they are doing in-house also. But, largely appliances and lighting is outsourced.

Okay. And appliances include what products, sir? Like, in terms of meaningful revenue?

So, appliances are contributing almost 10-11% in our overall SMG revenue.

It comes, generally, from, like, deserts or poolers and smaller plants.

Got it, sir. And incrementally, like, longer term, is the company thinking of getting into in-house manufacturing, or is it generally going to follow the same model right now?

Generally, the same model will keep following what they are doing ahead of now.

Oh, well, I'm answering my questions and best wishes for the year. Thank you.

Thank you. The next question is from the line of Tisha from Trinita Asset Management. Please go ahead.

Am I right here?

Yes.

Yes, thank you for the opportunity. My first question was on the FMEG side. The week one has reached, like, recently, and I expect, like, FY27, we are on the track, like, the timeline has flipped a little bit. What was the specific driver for this delay each time? Like, what is the scale, was it distribution, or was it the price in competition?

So, at the beginning of the year, like, earlier we were targeting to achieve break-1 Q4 of FY26, but as there were, like, really high fluctuation or increase in our homeowner prices, so we were not able to achieve that break-1, but now we are able to achieve, but on personal basis, we are expecting to achieve

break-1 on ELD basis in this year, and then we'll keep going.

Okay, and my other question was on the dealer and distribution side, like how are we doing the network scaling with the network to the revenue growth? Is the channel expansion keeping it safe?

Can you repeat this earlier? This is not clear.

My other question was on the dealer distribution networking and, like, how is the growth of expansion in the channel? And, like, we made it to the revenue growth, like, the revenue for distribution being increased.

Yeah, I thought your question. So, from dealer distribution point of view, of course, we are increasing our retail presence all over India. Actually, we have, like, established all over distribution channels all over the country. The only thing left of our retail distribution, maybe, like, in some states, we are doing very good at, but in other markets, it's still that way. At the same time, we have more than 1.5 lakh retail touch points, and if we keep growing, so that's our increase, and we can achieve the

expected working environment as well as a family treatment.

Okay, the last question is to come here. What is the exceptional item of 14 crores this time? May I know the reason behind it, please?

So, exceptional item, if you recall, in like Q3 of last year, there was, due to labor court, there was some exceptional left of 19 crores. And since that time, the rules and the details were not clear, so now, as... Everything was cleared, there was a reversal of the

14th row in this quarter, due to the change in labor force and safety on that.

Yes, got it.

As the restructuring happened after clarity of rules,

these benefits come in this quarter.

Okay.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on the touchroom telephone. Reminder, anyone who wishes to ask a question may press star and one on the touchroom telephone. The next question is from the line of Drew James from Ambit Capital. Please go ahead.

So, thank you so much for the opportunity again. Two things. One is that if you could just tell us your capacity utilization in CPEX for 27, 28, how should you think of that number, and if you could break this down both from buyers and people's perspective, what is your utilization? That's my point.

So, if you see, overall, we had a capex plan of around 1,200 crores, in which almost 80% is focused towards the cable side of the business, out of which, like last year, we did around 300 crores, and this year, major size of the tax function will be executed, and about 600 to 650 crores will be deferred in this year. Again, major part is towards the table only where like earlier we had capacity utilization of almost 90% and even now growth is more expected from table side of the business.

And so, what is the utilization for WIAS? WIAS is around 55 to 70 percent. Yeah.

Okay. And, you know, given the time that we've done about 70 percent volume growth in this quarter, I understand that last year, in the third quarter, you know, your base was higher. But just from a FY27 perspective, what is the kind of volume growth you anticipate in this year? And given the fact that Middle East Coast will also come back properly in the rest of the process.

So, if you see our long-term guidance and even overall volume growth, we are expecting to achieve growth of around 18% here on the Earth, what we have guided at the beginning of FY26, and we are still able to hope, we are hoping to achieve that kind of volume growth. So, this year, also, we are expecting around 18% volume growth.

So, just one piece, you know, SMEG believes

in one of your players, a couple of your players actually, you know, get into solar and new, so it is a big way. So, anything that you guys are exploring in that way, please?

Right now, we do not have any plan in solar, but we will keep focusing on current product category and expand those categories.

Thank you for the follow-up opportunity.

Sir, if you could help us understand in terms of the dealer distribution count and the retail touch points, you said $150,000. How was it, say, last year, same time, if you put this call out, what has been the growth there?

So, rather than growth now, it is like dealer distribution is in consolidation phase where we want to increase the depth of my distribution and like achieving higher revenue per dealer distributor. So, our focus is on making balanced approach towards distribution and dealer depth and growth. But, of course, retailers are like, it is like continuous process where we keep adding 2,000 retailers every year. Like last year approximately we have added around 20 to 25 thousand retail points.

And similarly, how much would have you added in the dealer distribution count?

No, there I will say not maybe increased, but there may be some reduction in numbers overall.

Got it.

Understood.

In terms of the... Price inflation, you mentioned 30% is basically the LME price increase, why, why? Does that mean a 15% effective price in given metal is about 50-55% of the revenue? Would that be a fair assumption?

So first, this 30% is about Q2 of like current year versus Q2, but since there is like, apart from this, there was inflation in... So there may be like net impact may be around 40% in metal price and that may affect around 25% in overall product pricing.

Understood. Understood. Got it. And third, in terms of the margins, sorry I missed that part, so 9.9% margin for 1Q. There is no inventory gain or any inventory loss in this purely operating leverage which is driving this margin. Have I understood right, sir?

Yeah, yeah. This is correct because inventory is a continuous process which is continuous for every quarter, but this is purely organic level margin improvement and growth.

Neither the inventory loss?

No. Got it.

Great, thank you. I wish you all the best.

Thank you. Thank you. The next question is from the line of Himanshu Singh from Baroda BNB Paribas Mr. Fund. Please go ahead.

Yeah, hi sir.

Thank you for the opportunity and congratulations on good set of numbers.

So, I just had one question. So, in terms of the unorganized

players, they would be facing working capital distress because of the elevated commodity prices. So, how do you see the share from unorganized to organized

in this quarter or maybe let's say last six months happening and how has that helped you?

Yes, there are no statistics that actually how unorganized is doing, but based on my experience and what we have seen, maybe every year 2-3% market is moving from unorganized to organized, not only for this semester or for a larger period of time if I see. So I think the journey is almost similar, so maybe 2-3% yearly the market is moving from unorganized to organized.

So, nothing major happened in the last six months, you are saying? No, I don't think so. Okay. Okay. Sure, sir. Thank you so much.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on the touch-tone telephone. Reminder, anyone who wishes to ask a question may press star and one on the touch-tone telephone. The next question is on the line of years meta from SKP Capital.

Please go ahead. Hello, Yash.

Hello.

Am I on YouTube? Yes. Yeah.

So, first of all, congratulations on a good setup number. So, I've got a few questions. So, I wanted to ask, so the wires and cable segment margin improved from 7.6% to around 9.9%. So, was this primarily because of product mix improvements, operating leverage, or better commodity management?

So, these are like mix-of-all initiatives as a layer of price, red key,

majorly size key, the margin improvements are used with scale benefits and better cost adoption. Besides, there are many other initiatives we are undertaking to improve our margin. So, these are like combination of many, all other things and several projects and so on.

Okay, okay, I've heard it. And given the current business mix and aggregation efficiencies, so should investors view the current margin profile as sustainable or was this quarterly exceptionally very strong?

So, if you see our overall guidance, like we had targeted to improve our margins by 100 basis points on year-on-year basis, and last year we were able to see, and even in this quarter, so, like, as per our original business plan, we are quite confident to achieve those guidelines of improving margins by 100 basis points on year-on-year basis.

Yes, all right, I understand. Thank you.

Thank you. The next question is on the line of BD3 Medis or Mission Market Securities. Please go ahead.

Hi, sir. Thank you for the follow-up question. Sir, I remember in one of your previous con-calls, you have said that cables command a margin of almost 11-12% in the exports market, while on the domestic front, they command 6-7% of margin. And the case is completely vice versa in the case of wires. While on the domestic, they command 11-12% on the exports, they do 5% margin. So, can you please explain why such a difference is there on the domestic front and the sport front in both the areas, I mean, in both the segments?

So, you should see India is the only country where wire is sold as a consumer product and will be a premium over your brand and brand value and presence in the market, while in global markets, wire is considered as a simpler product, which is like a kind of simple with less investment you can make, but in table, you need precise manufacturing capabilities, some typical hard approvals also, and the complex manufacturing process. And that is the reason. And at the same time, I would like to clarify that our margins in cable, in domestic cable, are in the range of 57%, but going forward, and if we achieve the scale, improve availability, then we will be in the range of 10 to 11% in domestic cable also, once we achieve the scale and sizable. Market share also. So, overall, of course, in the export wire, margins will be less, but in domestic wire, we have higher margins, and in export cables, margins are already good, but in domestic cables also, our margins are improving in current share.

Got it.

So, thanks a lot. Thank you. The next question is from the line of Vivek Gupta from Star Investments. Please go ahead.

Yeah, hi. Am I audible? Yes.

Yeah, hi, sir. So the wire and cable segment margins expanded about 9.9% despite strong growth. So what were the key drivers, like if you could just break down between the product mix, export mix, or the operating leverage, or the lower competitive intensity?

So, overall, if you see, like in our volume growth, we have baggage attack in cables, we will have higher growth in compared to wires because of our base or our presence. Since we started our journey from wire, we have a fairly good share in wire, but in cable, now we are improving. So, majority of the growth will come through cable side. And overall, if you see the way infrastructure development is coming in India or green energy in green and solar or data center or export opportunities. So, overall, we see that cables may grow at higher rates than where. At industry level, it will be more contribute.

Cable growth will be more.

Okay, sir.

Are you seeing any pricing pressures from the new entrants or the aggressive bidding in institutional and project business?

Not really especially, but competition is always part of our business and one has to be always ahead of the competition with some quality or availability and everything.

So, we have not seen anything special in this quarter or last. Okay, okay.

Sir, which geographies contributed most to the export growth and are there any regulatory or tariff related opportunities helping Indian exporters to gain the share globally?

So, as of now, the biggest contributor in our export is Europe and Middle East, and it is going to contribute as usual at higher pace, but at the same time, U.S., we see as a new opportunity, and maybe once this type of thing settles, then we see good opportunity for us in U.S. market also.

Okay.

So, the FMEG business has achieved operational break-in for the first time. So, what specific actions enabled this turnaround and also, like, is break-in likely to sustain every quarter going forward or was there any seasonality benefiting this quarter run?

So, of course, this is the first time, though we are targeting our background at ERD basis, but we are targeting our background. I am happy to share that in quarter 1 itself we were able to achieve the PQ1, but at the same time since this Q2 is a little bit lower in SMG side, so this quarter may not be possible, but we are, we will try to achieve better, or maybe, but then on really this, we are quite sure to achieve PQ1 in this year, and we will maintain this positive side of.

Okay, okay, sir.

So, given the strong demand outlook, what is the CapEx plan for FI27 and FI28?

So, if you see our project, right, guidance, what we have given in F526, where we are, like, have a tax plan of 1,200 crores, compiling F26 to F528, and we are on track of that. Out of, already, I answered that, out of that, already 300 crores we have invested in last year. This year, it will be around 650 crores and so.

Thank you.

The next question is from the line of Pahoyl Sharma from DD Capital. Please go ahead.

Hi, sir. Thank you for the opportunity.

I just wanted to ask, like, could you share which categories are contributing the most to growth, and also whether the KMID region is playing a larger role like than before?

So, initially, I informed that in a remedy that we have grown in life. Lighting transition features. And in French business, of course, our realization is improving due to better premium product mix.

And almost 25% of our revenue is coming from premium product category.

Understood, sir.

Understood. And now that break-even has been achieved, so like what are the next milestones for the SMEG business in terms of like profitability and also the scale over the next two to three years?

So, first of all, like, we are targeting growth of around 20% in FMG business and also achieving JT1 on sustainable basis first for this year and then make this business profitable in coming two, three years on continuous and sustainable basis with top-line growth of around 20% year-on-year.

Okay, sir. Okay, thank you so much, sir.

Thank you. Ladies and gentlemen, that was the last question. I now hand the contents over to Mr. Rajesh Jain for closing comments.

Thank you everyone for taking some time out to participate in this call. In case of any queries, reach out to us or our Investor Relations Agency, MUSG Investor Relations. We wish you all the best and hope to interact with you soon. Thank you so much.

On behalf of RL Kabel Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.